A group of prominent Democrats on Tuesday once again urged President Joe Biden to extend the federal student loan payment freeze and to forgive $50,000 in student debt per borrower through an executive order.
At a joint news conference, Senate Majority Leader Chuck Schumer, D-N.Y., Sen. Elizabeth Warren, D-Mass., and Rep. Ayanna Pressley, D-Mass., urged Biden to use his executive authority to make these changes. Currently, federal student loan payments are set to begin again in October but Pressley said the recent spike in COVID-19 Delta variant infections justifies pushing the date out further.
"We urge President Biden to act with urgency," Pressley said at the news conference. "Failure to act would be unconscionable, would undermine our economic recovery."
Even if the Biden administration decided to take action, such measures wouldn't help private student loan borrowers because they are not eligible for COVID-19-related federal student loan forbearance and also wouldn’t qualify for forgiveness. However, there are still options available to them, such as refinancing their student loans. Refinancing could help borrowers save on their monthly payments by getting a lower interest rate. Visit Credible to find your personalized rate.
This isn’t the first time Democrats have called for an extension to the student loan payment freeze. Previously, Democratic lawmakers sent a letter to Biden with the results of their inquiries to student loan servicers, showing many were concerned about their ability to end student loan forbearance.
Now, lawmakers are renewing that call.
"Should payments resume on Oct. 1, millions of students, borrowers and parents will be abruptly pushed back into repayment at the same time, even those who are living paycheck-to-paycheck or without paychecks at all," Schumer said at the news conference. "This could stall our economic recovery and bring millions of student loan borrowers to the edge of a financial cliff."
If Biden extends the federal student loan payment freeze or decides to cancel any amount of student loans, private student loan holders will not be eligible for these benefits. If you're interested in refinancing your private student loans as an alternative, you should visit Credible to see what options are available to you.
What to do if you have private student loans
Just because private student loans aren’t eligible for the federal payment freeze or potential forgiveness programs doesn’t mean private borrowers are out of options. Here are a few they can consider:
- Refinance your private student loan
- Speak to your lender about deferment
- Go into student loan forbearance
1. Refinance your private student loan: With interest rates at record lows, now could be a prime time to consider refinancing if you have private student loans. This could help borrowers save on their monthly payments and the amount they pay over the life of the loan. Visit Credible to get prequalified in minutes without affecting your credit score.
2. Speak to your lender about deferment: If your circumstances have you unable to make your payments at all, most private lenders will work with borrowers on deferment options, allowing them to pause student loan payments due to economic hardship or unemployment. This option lets borrowers pause their payments for a set time without accruing interest. Borrowers must reach out to their servicer to see if this option is available.
3. Go into student loan forbearance: If you don’t qualify for deferment or your servicer doesn’t offer it, some private lenders offer forbearance options. This also allows borrowers to pause their payments but the loan's remaining balance continues to accrue interest while payments are on hold.
While deferment and forbearance each require proof of financial hardship, anyone can apply for a student loan refinance and benefit from the potential lower monthly payments. With interest rates at all-time lows, now could be a good time to refinance your private student loans. You can get in touch with a student loan expert at Credible and have all of your questions answered.
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